India-China relations
Following the clashes between Indian and Chinese military in Galwan (Ladakh) and Sikkim, there is a general sentiment in the public to avoid Chinese goods. The Government of India has also made some policy changes to minimise the dependency on Chinese goods.
However, the data suggest an increase in India’s imports from China to 31% (in $ terms) during the first eight months of 2022 compared to the same period last year. On the other hand, exports to China declined by 34% during the same period.
It is difficult to reduce dependency on China in the short term. However, the government is trying to reduce dependence on China by encouraging Make in India and other such policy initiatives like Production Linked Incentive Scheme for Large Scale Electronics Manufacturing.
From the market share perspective, the share of China in India’s total imports has marginally declined since the Galwan crisis. However, the share of China as an export destination has declined substantially from 9.5% in June 2020 (violent clash between the Armies of India and China in Galwan) to 2.5% in Aug 2022.
The popular slogan in India, “boycott Chinese”, seem to have adversely impacted Indian exporters but hardly lessened the dependence on China on the import side.
Russia-Ukraine war
Russia’s invasion of Ukraine, which started in February 2022, has impacted India’s trade. For example, India’s exports to Russia; the major commodities involved here are pharmaceuti- cals, telecom devices, iron and steel, tea and chemical products. On the import side, items like pearls, semi-precious stones, fertilisers and vegetable oils were also affected.
On the positive side, India’s global wheat exports have increased since the start of the Russia-Ukraine war. Russia and Ukraine together comprise 25 per cent of the world’s wheat exports. Even though India is one of the largest wheat exporters, its share has been below 1% of the global wheat exports.
On the shipping side, bunker prices have gone up due to the Russia-Ukraine crisis, which has slowed down the downward trend of container freight rates to some extent.
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